>The property taxes cited are fascinating. $3k per year on a 20 million dollar home??? As they say, there's your problem right there.
It's very misleading, or downright wrong. Firstly, you'll pay tax on the sale (stamp duty), of 7%. There used to be a loophole for corporations, but that's now been closed (if you buy as a corporation you'll pay 15%). So already you've paid $1.4 million in tax.
You then pay council tax, which isn't property tax, but a tax for basic services such as waste disposal, etc, that your local authority provides.
It normally isn't very helpful to 'pick and choose' taxes when comparing them to the US, partly because the UK taxes some things very differently. For example, a sales tax in the US of 20% would be political suicide, but yet that's effectively what happens in the UK with VAT.
Firstly, you'll pay tax on the sale (stamp duty), of 7%.
On a £20million property? It'll be owned by a shell company in the Vigin Islands or some other tax haven & only the ownership of the company will ever change hands so no stamp duty will be due in the UK.
Yes, this is iniquitous. Stamp duty should clearly be replaced by a better targeted land tax, but good luck getting any UK government to make that change...
> It'll be owned by a shell company in the Vigin Islands or some other tax haven & only the ownership of the company will ever change hands so no stamp duty will be due in the UK.
I believe this isn't true any more. Legally, stamp duty will be due at 15% in this case.
Of course, whether this is enforceable, whether the authorities make any effort to enforce this (as opposed to it being a nice sounding law to appease the public), and whether the people involved actually report these transactions are entirely different matters, and I wouldn't be optimistic.
I believe this isn't true any more. Legally, stamp duty will be due at 15% in this case.
Only for newly built properties - the transfer into corporate ownership attracts 15% duty. However, properties that are already owned by offshore companies care unaffected.
I agree that there are probably ways round the new rules too: The tax laws in this country are so complex that those who can employ the best accountants and lawyers can often simply out argue the Inland Revenue.
I've often wondered how that works. Yes, obviously you can avoid stamp duty that way, but then you're in to "living in company property" area - and that's taxed as a benefit in lieu of income, which would be much more than just paying the stamp duty.
If you're being paid partially in kind, then the Inland Revenue expects to receive it's cut no matter what shape that income takes.
However, if you're not being paid to live there in return for some service there's no employment contract and no income tax to pay. At least that's my understanding of the situation.
You don't pay stamp duty if you structure it correctly. The trick is to not buy the title, but instead buy the holding company that holds the title. Buying a company also incurs stamp duty, but it's readily dodged by declaring the purchased holding company an investment and being domiciled offshore, at which point no stamp duty is due, and any capital gains can be deferred until the point of sale/realisation.
Re: council tax - again, you don't pay this if you declare the property unoccupied, or have the property zoned such that it's not applicable. This is often achieved by having the holding company be owned by a charitable trust, who operate the home as "offices", which would have business rates applicable, but as a charity they're reduced by a minimum of 80% and with an appropriate backhander, to 100%. The other option commonly followed is to make the chain of ownership/domicile so insanely complex that the authorities don't bother/can't follow the trail. Property owned by a trust owned by a charity owned by a holding company owned by a trust owned by... you get the picture.
In reality, plutarchs who manage property portfolios in the UK pay no tax whatsoever more often than not, so the $3k per year is a bit of a misnomer.
VAT is not a 20% sales tax; it's a 20% tax over the profit the seller has over the final customer. If a seller has a 40% profit margin on a product then he pays taxes over that, not the entire cost of whatever he's selling.
It's the customer who pays VAT. Businesses don't pay VAT, they only collect it for the tax man (and in cases where they have paid it, they claim it back).
It's very misleading, or downright wrong. Firstly, you'll pay tax on the sale (stamp duty), of 7%. There used to be a loophole for corporations, but that's now been closed (if you buy as a corporation you'll pay 15%). So already you've paid $1.4 million in tax.
You then pay council tax, which isn't property tax, but a tax for basic services such as waste disposal, etc, that your local authority provides.
It normally isn't very helpful to 'pick and choose' taxes when comparing them to the US, partly because the UK taxes some things very differently. For example, a sales tax in the US of 20% would be political suicide, but yet that's effectively what happens in the UK with VAT.